PJSC Severstal, one of the world's largest vertically integrated steel and mining companies, has withdrawn from its structure the B2B marketplace Idustrial.Market. Center for Industrial Procurement LLC is the parent company of the marketplace, where currently 100% is owned by Severstal.
Idustrial.Market is the first digital platform in the Russian Federation where B2B companies can place and place an order in categories tail sped (non-strategic purchases), while reducing costs by 5-20% due to competition between dozens of suppliers in each product category. Severstal announced the launch of the platform in November 2020, providing critical volume on the platform at the first stage of the project and solving its tasks for efficiency.
Severstal conducted pilot tests of the platform in the second quarter of 2021 in the Vologda Oblast. More than 50 suppliers and more than 200 customers were connected to the platform.
The key result of the pilot was the digitalization of the process: reducing the average time of the procurement cycle from 30-90 days to 1-16 days (compared to purchases using the stock scheme), reducing the number of interactions in the ordering process twice, placing more than 100 thousand SKUs of goods on the platform and placing orders in all categories, the main of which are electrical equipment and tools. In addition to this, the growth of purchases through the platform exceeded 200% in the last month of the pilot. Now Severstal plans to scale the solution to its other assets.
“As a result of the pilot, we made two fundamental decisions: the withdrawal of the company from the Severstal perimeter, respectively, the creation of the Industrial.Market marketplace, which will be available to external clients. We are convinced of the prospects of digitalization of the procurement process: the volume of the Russian tailsped market is estimated at about $ 20 billion per year. We plan to become leaders in this market with a share of tens of percent in a few years. Therefore, the separation of the marketplace into a separate structure allows us to scale the business beyond the companies included in Severgroup *, create a motivation program for the Idustrial.Market team and give an additional impetus to the establishment of a wide range of partnerships, "commented Andrey Laptev, director of business development and corporate venture projects at Severstal. .
“The market - both large customers and suppliers - already has a very strong interest in using Industrial.Market. Several agreements with large industrial companies are currently being signed. In terms of strategic vision, we plan to become an effective online consolidator of non-strategic purchases in Russia. The B2B procurement market in Europe and the United States underwent a transformation by using a similar solution - Amazo Busiess - five years ago. At the end of 2020, the Amazo subsidiary showed sales growth of over 50%, stronger than Amazon itself. Idustrial.Market brings this transformation to Russia, "added Idustrial.Market CEO Andrey Nurumov.
Non-strategic purchases - at least 5%" tail "purchases of large companies (for example, electrical devices, instrumentation, tools, building materials, cable products, etc.).
* LLC" Severgroup "(" Severgroup "), a private investment a company that carries out asset management activities in the interests of Alexey Mordashov.